What's my next step?

RedneckHipster

RedneckHipster

My friends and I have started the process of starting a hot sauce business recently, and I'm slightly overwhelmed/spinning my wheels momentarily. You know, that feeling like when you say a word too many times and it stops making sense? lol
 
anyways, We have our LLC and insurance. We're about to get our county and city licenses. We have a bank account and we have recipes. We want to do the bottling ourselves and we have a commercial kitchen through the county cooperative extension office. Our graphic designer just finished our logo. 
 
We are wanting to sell small batches online and eventually get our stuff in stores. Am I missing a step and/or what's my next step? What should I be focusing on now? I feel like it's time for creating my labels and having them printed. We have 6 different sauces and we want to sell a dozen of each per month. 
 
I know the FDA needs to be involved since we're selling online and we're also located in the tri-state area of KY-OH-WV so we'll be selling across state lines frequently. We're putting our logo, ingredients list, and nutritional info on the labels. we're also registering our products with KY PROUD since we use a few local ingredients. We'd like to put that sticker on our labels as well. 
 
Should I be focusing on labels right now or is there more I need to do before we start cooking and bottling?
 
Help me Oprah! Help me Tom Cruise! Somebody help me. lol It's late and I've been on the internet too long. Ignore this last part. But seriously, can someone help me with my next step?
 
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RedneckHipster said:
My friends and I have started the process of starting a hot sauce business recently, and I'm slightly overwhelmed/spinning my wheels momentarily. You know, that feeling like when you say a word too many times and it stops making sense? lol
 
anyways, We have our LLC and insurance. We're about to get our county and city licenses. We have a bank account and we have recipes. We want to do the bottling ourselves and we have a commercial kitchen through the county cooperative extension office. Our graphic designer just finished our logo. 
 
We are wanting to sell small batches online and eventually get our stuff in stores. Am I missing a step and/or what's my next step? What should I be focusing on now? I feel like it's time for creating my labels and having them printed. We have 6 different sauces and we want to sell a dozen of each per month. 
 
I know the FDA needs to be involved since we're selling online and we're also located in the tri-state area of KY-OH-WV so we'll be selling across state lines frequently. We're putting our logo, ingredients list, and nutritional info on the labels. we're also registering our products with KY PROUD since we use a few local ingredients. We'd like to put that sticker on our labels as well. 
 
Should I be focusing on labels right now or is there more I need to do before we start cooking and bottling?
 
Help me Oprah! Help me Tom Cruise! Somebody help me. lol It's late and I've been on the internet too long. Ignore this last part. But seriously, can someone help me with my next step?
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A few thoughts:
 
1. Good on you llc and insurance.  Smart.
 
2. County/City licenses to sell or to produce?  To do the bottling yourselves you'll need a licensed kitchen and at least one of your team to be sanitation certified by the local health authority.  (search local county health department for more info, it's common for shared use kitchen to have site staff that are documented)
 
3. Before you get online and in stores you need to get out in the public.  Farmer's markets and indy retail in store demos are a great way to start the flow of traffic and sales log.  Think of it like this:  If you don't get out into the world to tell people about your excellent hot sauce, then no one is going to know to buy it online.  And stores won't carry it because you have no sales history.  It's the gauntlet you need to weather on your journey into business. 
 
4. The time to be creating and printing your labels is important.  You should already be well on that path and nearly finished.  Ky Proud will send you free artwork to include on your label once you prove local ingredients.  They'll also want you to join the group and pay some fees, but it will likely benefit you more to do it than not.
 
5. Six different sauces.  1 case (12 bottles) of each sauce sold per month.  6 x 12 = 72 bottles sold per month.  Let's ballpark your sauce at $6 a bottle.  That would mean $6 x 72 = $432 of sales per month.  You'll need to figure out exactly how much it is costing you to produce each bottle of each of the six different sauces.  I'd suggest pricing them on a scale according to how much each sauce costs to produce, or building that margin in to each of the sauce's pricing to even things out.  Knowing your cost per bottle (ingredients/label/bottle/cap/etc) is KEY to figuring out how to price your sauce.  Do not skip this step.
 
6.  It's not science.  Make hot sauce and sell it.  Don't allow paralysis through analysis take over.  Find opportunities to market your product and pound the pavement to get the word out.  If your stuff is good and you've got the will to make it happen you will succeed.    
 
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SmokenFire said:
 
A few thoughts:
 
1. Good on you llc and insurance.  Smart.
 
2. County/City licenses to sell or to produce?  To do the bottling yourselves you'll need a licensed kitchen and at least one of your team to be sanitation certified by the local health authority.  (search local county health department for more info, it's common for shared use kitchen to have site staff that are documented)
 
3. Before you get online and in stores you need to get out in the public.  Farmer's markets and indy retail in store demos are a great way to start the flow of traffic and sales log.  Think of it like this:  If you don't get out into the world to tell people about your excellent hot sauce, then no one is going to know to buy it online.  And stores won't carry it because you have no sales history.  It's the gauntlet you need to weather on your journey into business. 
 
4. The time to be creating and printing your labels is important.  You should already be well on that path and nearly finished.  Ky Proud will send you free artwork to include on your label once you prove local ingredients.  They'll also want you to join the group and pay some fees, but it will likely benefit you more to do it than not.
 
5. Six different sauces.  1 case (12 bottles) of each sauce sold per month.  6 x 12 = 72 bottles sold per month.  Let's ballpark your sauce at $6 a bottle.  That would mean $6 x 72 = $432 of sales per month.  You'll need to figure out exactly how much it is costing you to produce each bottle of each of the six different sauces.  I'd suggest pricing them on a scale according to how much each sauce costs to produce, or building that margin in to each of the sauce's pricing to even things out.  Knowing your cost per bottle (ingredients/label/bottle/cap/etc) is KEY to figuring out how to price your sauce.  Do not skip this step.
 
6.  It's not science.  Make hot sauce and sell it.  Don't allow paralysis through analysis take over.  Find opportunities to market your product and pound the pavement to get the word out.  If your stuff is good and you've got the will to make it happen you will succeed.    
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Sorry for the slow response time. I got busy with finals in my masters class and forgot I posted. lol
 
1. Thank you! I'm glad to hear I've done something right. lol
 
2. I thought we got the licenses. We have not yet. Which should I get? Both? (There's three of us working on this from long distances apart and the licensing was a miscommunication. We're working on it immediately). We also booked a specialty kitchen in Newport that works with small food businesses. http://www.incubatorkitchencollective.org. I'd say they have someone there with the documentation to bottle.
 
3. We have some events coming up in the near future (local vendors events), but we've had a lot of positive feedback about the 200 hobby bottles we've sold. That's how we ended up hearing from the local shop that wants to carry our sauce. We're working on business cards to pass out as well. I'll try to book more local events to help get our names out there faster. Thank you for that advice.
 
4. I should seek label advice in the other forum correct (bottling, packaging, and marketing)? Thanks for the KY proud info btw. 
 
5. We'll be cooking on the 21st and we plan on calculating all of those costs while we're together and have the time. It is definitely not a step I will be skipping. I just wish I would have thought to do it sooner.
 
6. Thanks for all of the advice and calming me down! I'm just so excited to get out there and sell sauce!
 
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Personally I wouldn't go into business with anyone other than a significant other. Businesses owned by multiple people, even friends tend to run into problems down the road. Do some research on it and think hard about it.
 
But if you are dead set on doing this, you're going in the right direction. Start small, get to farmers markets and sell your sauce wherever you can. Keep in mind, the margins are low - You've got to sell A LOT of sauce to afford to make the sauce, pay insurance, fees, etc. Don't expect to pay yourselves anything for the first few years until the company gets off the ground. You'll use every dime you earn to pay for making the sauce, website, designing new sauces, and to pay for the company bills. And if there's 3 or more owners, then you're going to have to sell A SH*T TON of sauce, to see some nice profit.
 
We sell roughly 45-50 bottles of our sauce at our Farmers Market every Saturday on average. So depending on how large your market is, you could sell 72 bottles a week easy.
 
Events are where it's at though, that's where you sell a lot of your inventory!
 
Online sales start slow, just like any business!
 
Good luck!!
 
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In most states, shelf stable acidified hot sauce has to be made in a licensed cannery by or under the guidance of a licensed canner. It's why many of us use copackers.

Check your state's regs - you may not be as licensed as you need to be. ;)
 
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Not sure what you are getting your masters in but in case it is not business . . .

The key to a good business partnership is a written exit strategy. This should be clearly written in your incorporation paperwork. When one partner decided to focus elsewhere, what happens? Instead of friends arguing it out, it's already decided.

Spend the money on a real attorney to sort these things out before there are comingled funds.
 
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mas_fuego said:
Not sure what you are getting your masters in but in case it is not business . . .

The key to a good business partnership is a written exit strategy. This should be clearly written in your incorporation paperwork. When one partner decided to focus elsewhere, what happens? Instead of friends arguing it out, it's already decided.

Spend the money on a real attorney to sort these things out before there are comingled funds.
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Your advice is keen and sound mas_fuego, but it's also just as likely to kill someone's motivation as it is to inspire them.   The post reads like:  "Hey you're starting a business that's great!  Prepare yourself for when some of your friends quit."  
 
Of all the things new entrepreneurs need to hear, things like "seek advice of good counsel to protect yourself/your assets" is surely one of them.  How that sentiment (and any other) is phrased and the method in which it is delivered is supremely important though, and it's something I really wish established entrepreneurs would take into account when dispensing advice.  
 
And I don't mean just you - not at all.  A large percentage of the advice given out from would be mentors all over the internet reads like just so much scare tactics and horror stories of things gone awry and all the potential pitfalls one needs to consider *before* trying anything.  So nothing gets done!  This has been my experience with mentor dot org and several other sites, not just here.  
 
Sorry /rant.  I guess I just wish we had more light shining in the darkness approach to sharing life's entrepreneurial lessons is all.  
 
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SmokenFire said:
 
Your advice is keen and sound mas_fuego, but it's also just as likely to kill someone's motivation as it is to inspire them.   The post reads like:  "Hey you're starting a business that's great!  Prepare yourself for when some of your friends quit."  
 
Of all the things new entrepreneurs need to hear, things like "seek advice of good counsel to protect yourself/your assets" is surely one of them.  How that sentiment (and any other) is phrased and the method in which it is delivered is supremely important though, and it's something I really wish established entrepreneurs would take into account when dispensing advice.  
 
And I don't mean just you - not at all.  A large percentage of the advice given out from would be mentors all over the internet reads like just so much scare tactics and horror stories of things gone awry and all the potential pitfalls one needs to consider *before* trying anything.  So nothing gets done!  This has been my experience with mentor dot org and several other sites, not just here.  
 
Sorry /rant.  I guess I just wish we had more light shining in the darkness approach to sharing life's entrepreneurial lessons is all.  
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This is light.

The earlier you have the difficult conversations the more free everyone in the relationship is.
 
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